Comcast, America’s biggest cable company, has launched an audacious $66 billion bid for Disney. The timing is shrewd, for Michael Eisner, Disney’s boss, is under attack for poor governance and disappointing results

WALT DISNEY must be spinning in his grave. There have been dark mutterings about the future of the group he founded at its Burbank headquarters in recent months. Even so, the hostile $66 billion bid for the film, television and theme-park company launched by Comcast on Wednesday February 11th was as surprising as it was cheeky. It was as if a young, fast-growing drinks company had bid for Coca-Cola. After all, Disney is Hollywood royalty. Its founder invented animated movies, and the company gave the world classics such as “Snow White and the Seven Dwarfs” and, more recently, “The Lion King”. It owns ABC, one of America's four broadcast networks. Its theme parks are the stuff of childhood dreams the world over.

Comcast, by contrast, is a relative upstart—albeit now a very large one. Founded in 1963 in Tupelo, Mississippi, the company has grown to become America's largest cable-TV operator through a series of daring takeovers, usually followed by brutal cost-cutting, rather than by carefully nurturing creativity. So Comcast's brave tilt at Disney is bound to fail, then? Not necessarily. For it comes at a time of widespread concern over whether Disney, and especially Michael Eisner, its longstanding chief executive, have lost their magic touch.

What Comcast brings to the table is unrivalled clout in distribution. Two years ago, the family-controlled company took over the cable division of AT&T, America's main long-distance phone company, in a deal worth $72 billion. That gave Comcast the dominant position it now enjoys in America's cable industry: with 21m customers, it has almost a quarter of all American cable- or satellite-television viewers; and with 5m broadband customers, it is way ahead of its nearest rival, SBC.

But Comcast is now looking beyond grinding out operating efficiencies and adding customers through mergers. It wants to get its hands on lots of programming content and to develop new services. Under Brian Roberts, its chief executive, the company has struck “concession” deals with Viacom and HBO in which both provide thousands of hours of programming to Comcast's new video-on-demand service. But Comcast has been eager to get a tighter grip on content than such deals allow. Last year, Mr Roberts considered bidding for the American entertainment assets of Vivendi, a French group. He would dearly love to get his hands on the goldmine that is Disney's back catalogue. In his letter to Disney's board, he envisages pumping Disney's content “through existing distribution channels and technologies such as video-on-demand and broadband video streaming, or through emerging technologies still in development”.

Earlier this week, Mr Roberts spoke to Mr Eisner, who rejected his “merger” proposal. This is hardly surprising. Mr Roberts's letter boasts of Comcast's stunning share-price record—double the return on the S&P 500 index since the firm was first publicly quoted in 1972. This stands in stark contrast to Disney's performance—lately, at least. Despite a revival since the summer of 2002, Disney's share price is barely half the level it was in 2000.

Indeed, Mr Eisner and his supporters at Disney have been devoting much of their energy to keeping him in his current job despite the campaign being waged against him by two former directors, Roy Disney (Walt's nephew) and Stanley Gold. The two men resigned from the board last year and have been lobbying fellow shareholders to remove Mr Eisner at the company's annual meeting in three weeks' time. They charge that Disney's performance has been poor under Mr Eisner, whom they also accuse of running the board like a dictator. In response, the company says it has implemented corporate-governance reforms, and that it has recently begun looking for a replacement to take over from Mr Eisner when his contract runs out in 2006.

Disney's financial performance has picked up of late—on Wednesday, it reported a sharp increase in net profit for the fiscal first quarter, to $688m—but it is facing challenges across its businesses. ABC has been overtaken by News Corp's Fox and is now trailing as America's fourth-largest broadcast network. Euro Disney, the Paris theme park in which Disney has a 39% stake, took years to become financially viable. Most striking of all, Disney faces a crisis in the movie animation business that it invented. Last month, the company failed to renew a lucrative film partnership with Pixar, a computer-animation business, after Disney accused Pixar of holding out for overly generous terms. This is a big blow for Disney, as Pixar was responsible for blockbusters such as “Finding Nemo” and “Toy Story”. Disney will retain the right to make sequels of these films, though these are not expected to be as profitable as the originals.

Disney has virtually abandoned old-fashioned, hand-drawn animation—it is closing its Florida studio and the feature-animation business will pare down to 600 employees, compared with 2,200 at the peak in 1999. At the same time, Disney has yet to develop a leading role in computer animation. That is why Lehman Brothers, a bank, estimates that Pixar movies will contribute almost half of Disney's film operating income between 2000 and 2005 (when the current partnership contract expires). Not only will Disney soon lose much of that, but it will be faced with a new competitor in its ex-partner.

Of course, Comcast's takeover of Disney is far from done. America is not always receptive to hostile bids, especially when the target is a national icon. And shareholders may feel that the 10% premium to Disney's current share price being offered is not enough—though Comcast may be prepared to raise it.

And then there are the regulators in Washington, DC, to worry about. Mr Roberts says in his letter to Disney that he is “confident that all necessary approvals can be obtained in a timely fashion”. But the planned takeover raises a number of thorny competition issues, including those of access to programming. That Comcast recently hired Victoria Clarke, formerly the Pentagon spokeswoman responsible for “embedding” journalists in Iraq, as an adviser, shows that it is spoiling for a fight. Whatever the outcome, it promises to be as entertaining as anything emerging from Burbank.